Now it is official that this recession will be long and painful. The stress tests are out and Obama Administration does not show the nerve to make bold moves like taking over most troubled banks. (read Paul Krugman’s article here: http://www.nytimes.com/2009/05/08/opinion/08krugman.html?_r=1) That means our pain will be very long. We have to live with the recession or very long jobless recovery will be there for many years.

The basic question we individuals will still need to answer is can we still make money in recession? Because ultimately we really not care much about the overall economy. What we really care about is are we able to make enough money for our stomach and for the rest of the family. First we need to take care of us and then the rest of the society.

The good news is yes we can make money in recession and we can do it in stock markets.

Here is how. Recessions is the time when economy changes gears. It is the time when companies that still business in old ways and sell old products and that has grown very big struggle to survive or die. Meanwhile their nimble and innovative competitors take over the world. Critical assets to build new stuff is now available for cheap. That is because the old companies end up selling good stuff at deep discounts. 

Most savvy investors and businessmen use the money they have at hand to build the really cool stuff the wanted to do all the time with much less investments because all the necessary stuff in really available at very low costs.

Also the consumers and businesses because of the their dire financial conditions will try new things that promise big benefits. Since the old ways are not working they are hard pressed to things in new ways that would substantially cut costs or deliver very high amount of benefits. They are prepared to sacrifice certain things they never wanted to before.

The summary of the broader macro economic trends will be following. 

• The dollar will go into long term downturn.
• People in U.S will finally start saving more and spending less.
• New economies like China, Brazil and India will learn to thrive without support of exports to U.S and Europe. 
• Gold will have its own gyrations. Most likely it will fall or stay the same.

The question is who can benefit and thrive is such an environment? Definitely the answer in not nobody. People and companies that demonstrate following characteristics will thrive and benefit.

Disruptive innovations that reduce costs substantially.

Green Tech: The days of simply keep doing the old way and causing harm to nature will not work. Carbon trades other tax incentives are here to stay. Companies that innovate and learn the thrive in the new environment will benefit substantially.

Disruptive innovations that will increase the ease of use substantially and provide value far greater than the price of the product.

I am on look out of such companies. I have found more than few. I would l like to blog about them